1-Star ETFs Poised to Plunge: PowerShares VRDO Tax-Free Weekly?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, PowerShares VRDO Tax-Free Weekly (NYSE: PVI  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at PVI and see what CAPS investors are saying about the ETF right now.

PVIfacts

   
Inception November 2007
Total Net Assets $336.2 million
Investment Approach Seeks investment results that correspond to the price and yield of the Bloomberg US Municipal AMT-Free Weekly VRDO Index. The fund generally invests at least 80% of its total assets in variable rate demand obligation bonds that are exempt from federal income tax with interest rates that reset weekly.
Expense Ratio 0.25%
Year-to-Date / 1-Year / 3-Year Returns 0% / 0.2% / 0.4%
Dividend Yield 0.3%
Alternatives

SPDR Nuveen Barclays Capital Short Term Municipal Bond ETF

iShares S&P Short Term National AMT-Free Municipal Bond Fund

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 59% of the 29 members who have rated PVI believe the ETF will underperform the S&P 500 going forward.

Just last month, one of those Fools, All-Star TerryHogan, succinctly summed up the PVI bear case for our community:

All this ETF will ever produce is an equivalent to short-term rates paid by municipalities. Since they're tax-free yields, I'd imagine the rates will be even lower than short-term corporate rates. So basically you're getting nothing after the management fee. I can't believe anyone buys this.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 02, 2012, at 3:40 PM, pjmetz wrote:

    So what do you get from money market funds after the management fee?

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